How did Texas tax casino-party fees and event decorations that were installed, removed, reused, discarded, or taken home by guests?

Plain-English summary

This April 29, 1987 letter superseded the Comptroller's March 13, 1986 letter to the same party-service provider. The casino-party treatment remained unchanged: admission charges or per-person chip charges were taxable, while one lump-sum fee for furnishing a casino party was a nontaxable service.

For a decorated backdrop installed and later removed, the transaction was a taxable sale if the decorations could not be reused and a taxable rental if they could. Construction, delivery to the event, teardown, and cleanup charges were taxable. Separately stated installation and transportation of rental decorations away from the site at the rental's end were nontaxable.

For centerpieces and decor that guests dismantled and took home, the transaction was a taxable sale. Assembly or construction was taxable, while separately stated installation was not. The decorator could give suppliers resale certificates for items transferred to customers as part of a sale or rental.

A nonprofit organization could not use an exemption certificate unless the event was part of its exempt function.

What this means for you

The same physical decorating work could be a sale or rental depending on whether the provider retained reusable property, but both classifications were taxable. Separately stating qualifying installation and end-of-rental return transportation mattered.

Common questions

Were casino-party admissions taxable? Yes, including a per-person charge for chips.

Was one lump-sum casino-party fee taxable? No. The letter classified it as a service.

Was backdrop decorating taxable? Yes, as a sale for nonreusable decor or a rental for reusable decor.

Which backdrop charges were nontaxable when separately stated? Installation and transportation of rental decorations away from the site at the end of the rental.

Were centerpieces taken home by guests a sale? Yes, a taxable sale.

Could a nonprofit organization always claim exemption? No. The event had to be part of the organization's exempt function.

Citations and references

• No statute or administrative rule is cited in the letter.
• The letter expressly states that it supersedes the March 13, 1986 letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8704L0818C01

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller April 29, 1987

Dear ***:

On March 13, 1986, I wrote to you concerning tax on casino parties and
party
decorations.

I am writing to give you an update on the taxability of your party
decorating
service. The portion of my letter concerning tax on casino parties has
not
changed. However, I'm restating your entire letter for your convenience.
This letter will supersede my letter of March 13, 1986.

"The first of these involves providing card tables for 'casino parties.'
These tables will be portable and reusable. The participants will, of
course, use only phony money. We are aware of a business that is
similar in operation. In short, we would provide the tables,
uniformed
dealers, and an amount of bogus currency to each guest upon arrival."

Answer: If you charge admission to the "casino" or if you charge each
person for his or her chips, tax is due on the charge.

However, if you just provide "casino parties" for one lump-sum fee, then
you are providing a nontaxable service.

Your second situation concerns decorating and you have described two
different situations.

"Scenario #1 - Our business contracts through an entertainment service
to decorate a backdrop for an event, such as a fashion show. Our
props and supplies are either constructed or purchased ready made.
The decorations are appropriately installed at the event, then torn down
and removed afterward. We do not leave anything at the site. Some of
the raw materials (ribbons, frames, props, etc.) will be discarded, and
some will be reused by use."

Answer: When you decorate a backdrop for an event and return to remove
the decorations, this transaction will be a taxable sale or rental - If
the
decorations cannot be reused, then the transaction will be a sale. If the
decorations can be reused, then the transaction is a rental.

Both transactions are subject to tax. Charges for constructing the
backdrop,
for transporting the decorations to the site and for tearing down or
cleaning
up will be subject to tax. Separately stated charges for installing the
decorations, and for transportation of the decorations at the conclusion
of the
rental will not be subject to tax.

"Scenario #2 - We contract a similar decorating job for a sit-down dinner
and
dancing event at a hotel. We construct and provide a number of
centerpieces
for the tables, as well as general overall decor. The entertainment
arranger
we contract through advises us that we will not be able to reuse any of
the
materials comprising the centerpieces the party goers dismantle the
centerpieces and cart whatever home. This case is different from the
first
scenario in that we do not retain all of our materials."

Answer: This transaction is a taxable sale. Tax is not due on any
separately stated charges for installing the decorations. Tax is due on
the charges for assembly or constructing the decorations. You may give
your suppliers a resale certificate in lieu of tax on items transferred
to
your customers as a part of the sale or rental.

A nonprofit organization may not give an exemption certificate in lieu of
tax
unless the event is part of the organization's exempt function.

This opinion is based upon the facts you presented. If there are
additional
or different facts, this opinion may change.

Please feel free to contact me if you have additional questions. You
may
write me, call toll free 1-800-252-5555 from anywhere in Texas or phone
512/463-4600.

Sincerely,
Adina Whittemore
Tax Policy Section
Tax Administration Division